GM argued in court that its sale to US treasury-funded Vehicle Acquisition Holdings LLC was the only choice available to the Detroit-based company other than liquidation, which remained a real possibility.

The Obama administration is keen to have decision on new GM reached by 10 July so the restructuring process can begin. It has warned that the bankruptcy loan it has provided to GM may be rescinded if a decision is not reached by then.

This could mean the company would be forced into liquidation, but it is unlikely the US government would allow this to happen.

GM’s proposed sale to the US treasury has angered many of its current bondholders and creditors, who would lose out financially should the sale go ahead.

The bankruptcy judge did not indicate when he was likely to make a decision on GM’s future.